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tv   Trending Business  Bloomberg  April 6, 2016 9:00pm-10:01pm EDT

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♪ it is thursday, april 7. this is "trending business". i am rishaad salamat. ♪ we will be live in sydney and hanoi this hour. asia-pacific stocks opening strongly. strengthening through the 110 level. good first quarter earnings for samsung. low on news of a
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a death do to lethal airbags. .ollow me on twitter @rishaadtv please use #trendingbusiness. let's have a look at what is going on. the thursday session and hong kong and shanghai at the bottom of the hour. juliette: not too bad at the moment. we had that positive session coming through from global markets. dovish minutes from the fed helping out. also, a strong rally in the crude price. rising by over 5% in new york. helping out the energy players. malaysia has started, flat. singapore with again. tie one coming back after the shocker -- taiwan coming back after the shocker.
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up.nikkei 225 the asx 200 up as well. it is driving on the back of what we saw in the u.s. session. gas players leading that charge as the crude price rallies in new york. if we look at the main stocks, five out of the six arising, led by beach energy. course, the health-care sector also having a big rally in offshore trade over the allegan-pfizer deal, now off. those int some of australia, up by almost 1%. yen, upr story is that for a fifth session in a row.
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earlier this week, people calling for 110 by years end. of 1% alreadyrd against the dollar, so we continue to see that yen rally. some pickup coming through in japanese equities in early trade. rishaad: let's get back to one of our top stories. quarter earnings eating estimates for samsung. sales estimates tripling the previous models performance. is no secret that sam has been struggling to regain has beenhat samsung struggling to regain the competitive edge. at 6.6rst quarter profit trillion yuan, compared to estimates of 4.8.
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estimates,o beat $42.4 billion or 49 trillion yuan in the first quarter. samsung deployed a new strategy that made the galaxy s7 a surprise hit. it released the phone faster than expected and priced them cheaper. they started selling the model about a month earlier, making the most bore apple'launch. sales reached 9 million units during the first month, triple of those of the s6. analysts expect profit to have chip a9%, beating the business, the biggest revenue source. ofwill have to see how much a boost as samsung does not break down the results until it releases the results. analysts expect operating income at the semiconductor business to
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have fallen 15% to $2.2 billion in the first quarter. the new model did little to boost earnings at that unit as with acame several chip upgrades. it began shifting its focus. ,he declining phone business but the first quarter looking a bit different. the stock today feeling a bit of pressure. that is after gaining 2% yesterday, now down 1% today. samsung has been in a slump for quite some time, falling for a third straight year in 2015. rishaad: right, will have a more detailed look in the course of the show. tweet us your thoughts at @rishaadtv, and use the #trendingbusiness. put in levels we
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haven't seen sex october 2014, and the japanese finance ministry official told bloomberg that action will be taken if needed. j.p. morgan said it can't stop the climb. garfield reynolds, why are they saying that intervention is futile? j.p. morgan says that intervention is futile is because the fundamentals have moved strongly in favor of the yen. exporters have bringing back cash. the current account surpluses surging relative to the economy, so intervention is the thing that stop speculators. that is just the tip of the iceberg. rishaad: is there some material impact. -- unstatedtated aims of abenomics was to weaken the yen as much as possible within reason, of course. what is the impact we have seen
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as it climbs above 110. ? >> there is a psychological impact, which is the last time it's all below 110 was when the secondied out bazooka, when he surprised markets back in october 2014 by expanding unprecedented bond buying. the point of from view of the potency of the bank of japan. said that a weak yen is a key part of the transmission mechanism. you can't get a 2% inflation target if you have a strengthening yen, because japan the on imports for energy and so much more, so a stronger yen means lower import prices, and that just means the 2% inflation target gets pushed back and back we arek, and that's why also getting people saying the boj will have to act, not by intervening to sell the yen, but
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by doing more on the monetary policy front like taking interest rates further negative. rishaad: thank you, garfield. garfield reynolds from sydney. ros. get it over to i said to release full-year results later today, expecting to see operating income be forecast. they also say they are planning to propose changes in management during the board meeting. the president, which would be a snub to activist investor daniel loeb. in march, daniel loeb raise concerns about the health of the current ceo, who is 83. he warned against the promotion of suzuki son to the post.
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any changes must be voted by the board. softbank has found a way to ease pressure on its telecom units. to a newll sell a unit entity backed by softbank and other investors, then release it back. it will free up $2.2 billion, which sprint can use on turnaround efforts and repay debt. sprint has $2.3 billion in debt to repay or refinance this year, and was $12 billion over the next five years. it had $6 billion in liquidity at the end of 2015. the assets to be sold are mainly equipment. last year, sprint created a phone leasing company, helping to raise $1.2 billion. unit foughtnking buy a competitors to
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barclays operation. they issued a statement saying it will use its own cash for the deal, worth $320 million. asia's growing spending power has prompted banks to widen their wealth management operations. barclays is shifting its focus to the u.k. and america. rishaad: right, were looking at how two harvard students are changing lending in southeast asia. it's on bloomberg.com. still ahead, or to 5% of hong companies areng listed offshore. in the wake of the panama papers, we find out what is behind that. interventionboj's an exercise in futility? ♪
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will, india -- well, intro for global finance cheese gather in washington, concern about central-bank supporting financial markets out of fear of turmoil and fx appreciation. he spoke exclusively to bloomberg tv. >> i don't think this is a stable situation, either we need stronger growth or need to recognize we have reached the limits of monetary policy and slowly we get back to normalcy across the world. bankery time the central starts moving towards normalcy, exchange rate appreciating, turmoil, etc., and we have to go back, we are in it for a long time. rishaad: oils advance at the
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minute, no rush to raise rates. let's have a closer look at what is going on at equities and the fx space. let's start off with one of our top stories, this move by the yen, strengthening above 110. , there ismething report from j.p. morgan saying thought 110 was the line in the sand for intervention, but they're suggesting that it will not make any difference. what is your view? >> it hasn't, has it? if you look at all the pressure and psychology at that 110 level , they were talking about intervention only a few hours ago and here we are back below 110 on the dollar-yen, and this is a one in 100 year market. this is very unprecedented.
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andboj is so far invested its credibility is being really question in the market. no other choice but to come in and intervene, so it will be interesting to see how that plays out. there is also pressure on the fed, with its timing, and you have europe in its own situation. as the governor said right before -- in the prior package before i came on air, we are in uncharted waters, and i think the boj has no option but to intervene to continue to intervene it is so heavily invested. there is no turning around. rishaad: are you say intervening in the fx space and defending the yen? >> those were the reports that came through a few hours ago that the boj -- it wasn't there are rumors
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in the market that the boj has been looking to come in and intervene and stop that appreciation against the dollar. the boj really has a mandate from the large japanese corporate's to do all that it can. it has been intervening ever tince the yen was a lo stronger a few years ago. the last thing it wants to see is those trade gains eroded by a currency that appreciates again. the fed is the wildcard, because the fed is buying as much time as it can, delaying, pushing out, using the same tactics we saw in 2015 to buy more time to move, but to do it at their own pace and delay as much as possible. rishaad: well, indeed, and the minutes do suggest that they will be moving. as you suggest, they are in no big hurry. how much will the earnings season in the united states prey on the minds of those members of
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the federal open market committee? >> i think they are definitely cautious, because u.s. earnings have now been beating and the moment has been strong for a long time. , when look at bullishness the markets surveyed as to how bullish traders are, we are around the same levels we were at since 2008, so there is a lot of optimism there, perhaps too much optimism, and perhaps this earnings season that is coming up very soon will slightly disappoint. impact of thethe fall out, the financial fallout, of lower energy prices and the of the energy companies in the united states, and a lot of the large lenders to those energy companies have been the banks, the major u.s. banks, and so there is a financial stability issue there that the fed needs to be aware of, so we think the fed won't move until the fourth quarter.
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now that is contrary to consensus and might raise an eyebrow or two, but we think this earnings season will disappoint and think the depressed oil scenario has not been completely price through, that the balance sheets of the large energy companies will have a financial fallout that will eds actions until the end of the year. rishaad: let's talk about rates where you are right now. these rates at record lows, but the thing is you are suggesting that australian banks will be moving up and bringing interest rates higher, so you're suggesting the rba may move another 25 basis points as a cut? >> we were polled last week and asked for our view, and our investment committee met a couple of weeks ago and form the view that we see another 25
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basis point cut for the reason banksplained, that the want to preempted by raising the rate so that if the rba moves, there is less inflationary pressure. one of the first banks move today a few minutes before i came on air, the bank of queens land, a small regional bank, not one of the big four banks, but still a large institution has look to increase its verbal interest rate. we think that the big four banks will start to move in anticipation of that cpi rate which comes at the end of this month, and i think what that will do is it will provide some room for the reserve bank to cut by 25 basis points, allow the banks to absorb some of that, and therefore depress the currency situation, but not cause too much inflationary pressure in the economy. rishaad: yeah, when you have the aussie dollar at $.76, is that going to set off any alarm bells? it was only a couple of years
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ago when it was at 110. >> look, we need every cent we can get, because the slowdown in the mining and energy space and the impact that has on gdp composition is absolutely huge. it is a lot larger than many other developed economies around the world, so what australia needs is the offsetting factors which are residential housing, services. we are very much a services economy into the agent region. sensitive.y is very education is one of our largest exports, currencies incidents, tourism, agricultural, so it makes a huge impact. our economy basically shut down and stalled when we or at or above parity, and we are still paying the price for that in australia, so there is some who do not want to see $.80. it looks more comfortable at $.70, and that is important for the balancing act in the australian economy. rishaad: great talking to you.
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up, a new prime minister. we are live in hanoi. we will find out how the country's political rebalancing will affect the economy. ♪
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rishaad: right, the shares have been suspended since march 7, z te slumping after it says it was uncertain about the u.s. penalties. this came out late wednesday. this is all down to the sanctions put into place then lifted, and then share suspended. the commerce putting in
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sanctions in place blocking chinese company over allegations that it resold goods two countries that had sanctions in posed, such as iran. that's what we have at the moment. the u.s. has suspended that ban until june 30. as a result, share price under severe pressure, 14% lost. the stories making headlines. fifa president says his integrity is not in doubt after the panama papers. withproved the 2006 deal two businessmen caught up in a corruption scandal. raided offices as part of what they say is actions against person unknown. they said it will fully cooperate with authorities. to opend myanmar pledge a new chapter in their sometimes strained relationship, raising the prospect that stalled
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investment projects could resume. aung san suu kyi met her chinese counterpart in the first high-level diplomatic talks. the talks included a $3.5 billion dam halted by the previous administration. john kerry has become the most traveled secretary of state in history. over one mileage is million miles. with 10 months ago, kerry shows no signs of letting up and will be in japan later this week. hillary kenton visited 112 countries -- clinton visited 112 countries. powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. vietnam's parliament and has sacked the prime minister with a vote for replacement to be held today. bloomberg news joins us by skype
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from hanoi. what challenges does the new prime minister have? do the other new leaders face as they begin their five-year terms? vietnam has had a pretty good economic story to tell, growth of 7%. unfortunately, the picture was not as rosy in the first quarter , 5.5%. part of that might have been seasonal, but there are growing concerns and the government that the drop in oil prices is devastating as well as a drought enemy calm delta -- mequon the delta. he will be facing a lot of economic headwinds as he takes over. rishaad: thanks a lot for that.
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right, up next, mainland chinese tourist avoiding hong kong. we'll be finding out why right after this. ♪
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♪ a look at her top stories. asian equities advancing after oil jumped and the fed notes show no rush to raise interest rates. the regional benchmark climbing the most in more than a week. japanese shares reversing early losses despite the yen strengthening. plus, the 110 level to the dollar. better first-quarter profit, s7sung's release of the giving it a head start on
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rivals. 9 millioned sales of units, triple those of the previous model last year. low afterching a honda confirmed a 17 your old -- 17-year-old was killed by a ruptured inflator last week when a 2002 civic collided with another vehicle, a 11 desk now vehicle, 11 deaths now linked. shanghai coming online. let's have a look at how things are shaping up. >> looking pretty good. janet yellen, those dovish minutes giving a boost to u.s. and european equities. that crude price continues to rally, the weak dollar, all of
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that playing into a positive session in this part of the region. quite a lot of buying coming through. singapore up. hong kong online with the rise of three quarters of 1%. for tens of 1% on the shanghai market in the early session. gameskkei adding to its despite the fact -- gains despite the yen pushed through 110 to the dollar. some buying coming through in the asx 200. energy and health care stocks driving the games, a 5% rally in crude. hong kong up 3.5%. petro china but in good. -- petro china looking good. health care stocks also looking strong. here are some of the more --
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samsung coming through with its numbers today, better than expected, beating estimates in first-quarter earnings after the early release of the galaxy s7, but a pullback in korea. australia coming through with first half profits that missed expectations, though the share prices higher. down 14.5% as it resumed trade for the first time since march 7 and following that u.s. probe. thank you very much indeed. getting back to our top stories. samsung preliminary first-quarter earnings ahead of estimates. the new smartphone proving to be a surprise hit. to wrong,s weren't but better than estimates. risingctations have been
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ahead of these preliminary results anyway. now you are seeing a bit of a pullback because people are selling on the fact. 1.3%.d: right, a lot of this is murky. we will get more definitive data when they break out the full earnings and we get everything. tell me something, just looking showese numbers, does this a resurgent samsung question mark -- samsung? >> it is too early to tell. in aew galaxy debuted market where there weren't any real competitive products. cominghone seven is probably towards the end of the year, and that will be the real gadget to beat. have beenina, they losing ground, and that has been proving a challenge as others take the market. it is too early to call. rishaad: tell me something,
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samsung is not just about phones. it is about an array of different products. >> in fact, the chip division until most likely recently has been the most profitable, but they are also having problems. apple it self is predicting its first sales declined in a decade , so with the entire global , prices forng components like chips and displays that samsung makes will fall as well. that will be a big headwind. rishaad: thank you indeed. let's check on some other stories. j.p. morgan chief executive jamie dimon says investors should brace themselves for lower liquidity and higher volatility, both here to stay. this is in his annual letter to shareholders. he said the bank has $19 billion worth of exposure to china. lose 4rgan stands to
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billion of that under extreme circumstances, but jamie dimon remains optimistic about china's future saying it will be a toploped nation with companies in next 20-25 years. volkswagen placing -- facing class-action lawsuit from dealerships, suing for fraud over diesel cheating scandal saying the company left them with continued losses by failing to fix the problem. franchiseother dealers to join them in a class-action come more than 600 lawsuits have been confined -- combined. they've given vw a deadline to fix the affected cars. citigroup acting on complaints is making changes to the way it calculates performance-based pay. executives can earn more than 100% of their bonus, but only if investor returns are positive. 20% withve tumbled concerns over global growth and general market conditions as
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well. an 11th death linked to potentially lethal airbags from takata. it's set the death happened last week. what do we know about this latest case. ? >> this crash happened in texas last week, killing a 17 year old woman. in the u.s. said investigators found the car had been recalled in 2011, but no repairs had been done to the defect, one of the key issues. american honda issued a statement saying it will share all available data and continue to cooperate, but does continue to urge owners affected by the airbag inflator recall to repair at authorized dealers as soon as possible. there are 29 million airbags being recalled.
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the biggest risk factor for these airbag inflator's are high humidity over a prolonged time and the age of the vehicle. this was a 2002 honda civic, registered in the gulf region for its whole life, a high humidity area, two factors that could have contributed to an issue with the airbag inflator. takata saying it is still investigating the root causes of the malfunction in its inflator's. -- inflators. this brings overall deaths in the world to 11. rishaad: something of a double billing? >> some of honda's customers say they have been billed twice for their monthly payments, and this causes concern to customers because some of them may go into overdraft.
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is investigating and will fix it as soon as possible. more details,for including how many customers are affected by this. they have been flooded by calls, overwhelming the system, owners trying to make their complaints known. rishaad: thank you for that. right, let's have a look at this. lenders rejected a arriumalization plan for . >> it is another story of a company struggling with the glut of global steel supply. up $1.5 billion in debt. you can see over the past five years how far they have fallen from trading just over two dollars to win trading was halted this week at two cents. things got ugly on february 22
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when they announced a 900 millon --ler recapitalization plan a $900 million recapitalization plan. this deal would have offered their lenders $.55 on the dollar. austria's big four banks are collectively owed $1 billion. notrstandably they were happy and said no, so now we have a situation where the company has gone into voluntary administration, so likely the banks will be too happy about that. they would've preferred to have named their own administrator. there are some parts of this company that are indeed still viable. >> that's right. it is not a complete basket case. the international part of the company, which makes grinding and crushing equipment for the mining industry, is still profitable, but the other tubing parts of the company are not. the iron ore division struggling was obvious problems, and the
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steelmaking part of the company is also in trouble. the main plant in south estrella has been running at a loss. south australia has been running at a loss. the government is already offering assistance should steel mill meal -- closed. rishaad: the japanese owner of 7-eleven down about 8.6%. 7.9%, the biggest decline since march 2011. the company set to release full-year results today, operating income expected to beat forecast. it is planning changes in management during that board meaning, could include the removal of the president, which would be a snob to the activist investor daniel loeb. and 8% decline there.
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up, china southern can grow its way out of a mounting -- pekingbt, but key university professor isn't so sure it will work here at hear his prescription for china, next. -- will work. here his prescript and for china, next. ♪
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>> welcome back. it is 9:43 a.m. in hong kong. these of the stories making headlines around the world. congressional report has recommended that in peach mint proceedings against the president go-ahead -- that impeachment proceedings against the president go-ahead. claims that she used illegal financing to hide the size of the budget deficit. basis, andarges are supporters called the campaign and attempted coup. two thirds of the lower house
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must support impeachment for it to proceed to the senate. iran says it plans to send a delegation to saudi arabia for talks ahead of this years hodge. it would be their first high-level diplomatic contact since a stampede last year when 2000 people were killed in the crush. saudi officials put the number at less than 800. iran says 464 of its citizens died in the disaster, blamed on incompetence. a u.s. judge has set a september trial date for people charged over the armed takeover of an organ wildlife refuge. faceof the accused also court next week over the standoff in nevada. have thead tried to oregon trial put off until the earlier cases cleared.
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they occupied the reserve for 41 days for what they call a protest over land rights. powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. well, chinese investors are pouring their cash into stocks and shares in hong kong, buying equities in record numbers. tom mackenzie is having a look at this. the are not visiting and numbers they were, but certainly are investing like never before. they are snapping up shares over concerns that will be further depreciation's down the line. also, valuations in hong kong -- rishaad: it is trading six times and the hang seng is 9.8, phenomenal. dual listed shares around 40% more expensive on the mainland than over here.
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those are some of the motivating factors. chinese investors have been net , splashinge october out $6.8 billion on hong kong equities. yuan depreciation a big analyst,g factor for predicting a 3.3% decline by the end of the year. rishaad: are they pouring into the stocks that trade because there is a 40% discount compared to the mainland? there are a lot of dual listed companies, hsbc the most popular stock according to jeffries. the rest are chinese companies, icbc, alibaba. a shares our editor when he 5% premium to their hong kong equivalent, so there is a motivation to get in on the act
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over here rather than in shanghai. a lot of analyst saying that there are continued concerns that the renminbi will continue to push money over here and plays into the question of how they keep those capital flows rained in. rishaad: thanks a lot for that. tom mackenzie there. ,he pressure on the renminbi and one of the reasons is the debt problem in the country. it has been a recurring theme this year. asked how the economy will be affected by a debt pile growing daily. as long as debt continues to expand, they can generate growth until they reach some point at run out of debt capacity, and my guess is may be three-four years maximum. after that, it will be very
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difficult to generate growth, and that's when that will be a constraint on growth. >> how should policymakers in beijing be dealing with this? a lot of things at face by you look like a terrible idea. looked into how local governments can take the burden on. there is no trick to this to this page you can't financially engineered your way out. somebody will have to absorb the cost of the debt, and there are three groups the traditionally absorb the debt, household sector, usually the one that pays for the debt. there is the private sector, which in the case of china is small and medium enterprises, and then there is the government. we can't really have the household sector absorbed the debt, because household consumption is what is supposed to drive chinese growth in the next several years. small and't have medium enterprises pay for it because they are the most efficient sector within the
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economy. so by a process of elimination, that leaves the government. the government can be divided into two groups, the central government and the municipal and provincial governments. the centralization process of president xi jinping, one way or the other it will be local, provincial governments that absorbs the cost. rebalance,empt to overcapacity plaguing: steel. thatpainted the picture curbing overcapacity will result in new growth. that is not how it will play out, otherwise they would have done more. >> i am very skeptical about these sorts of moves. historically, when countries have a debt problem, they do two things. first, it is not a solvency problem, it is a liquidity problem. secondly, they take steps to
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improve productivity and argue that over the long term it will result the debt problem. the issue that i have is that that has never worked historically. countries that have a debt problem have never been able to grow their way out of debt. they have always ultimately gotten some kind of -- while i would argue that beijing is implementing steps that would make sense under normal conditions, i don't think it will make a difference. this is also true about many countries in europe great the reforms will something not make a difference. -- europe. the reforms will simply not make a difference. we ask why hong kong companies are upfront about their offshore activities. this is "trending business". ♪
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rishaad: you are back with
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"trending business". makerinese solar panel may default on payments due next month. it will be said difficult to play $220 million plus the final installment of illion due on may 12. no agreement with creditors has then met yet. global regulators looking to raise the rates for capital requirements as they suffered debt financing limits. bankingtee on supervision said a surcharge on the leverage ratio is based on the size of a lender's balance sheet. the committee imposing a higher capital ratio on the 30 largest global banks. indeed come also because they want to get around this whole concept of too big to fail. in this part of the world have joined a growing list
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of those scrutinizing the panama papers. singapore, malaysia, taiwan, sayingd, pakistan, all it is investigating those citizens in the documents. it won't hesitate to take action if it finds evidence of tax evasion. a malaysian prime minister says he is no longer linked with companies named in those papers. while most investors like to keep their link to offshore financial centers quite, that is not the case in hong kong. we've been writing about this. he is here in hong kong. it seems almost a point of pride, doesn't it? to be based in these tax havens. the hang seng no impediment to that. >> when you look at some of these companies, the noodle maker very popular in mainland china.
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cayman islands is part of the company name. 45% of the market capitalization of the hang seng index is listed in the cayman islands in bermuda. that there are big companies, some controlled by the chinese state, one of these offshore companies. rishaad: isn't this common practice elsewhere in the world? it is common, but not on the scale. 45% of the market capitalization of the hang seng. , companies there -- they are the messiah in domiciled in- are
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switzerland. 30 are not offshore. strait times index, four companies registered offshore. one of them is hong kong land. rishaad: the question then begs itself, which is why hong kong is so overrepresented. >> good point. there is one direct reason. the stamp duty on share transactions, and at the margin that is pretty small, but it does make the cost of raising capital through share transactions higher. the other point is a more general one. look at the $1 trillion in capital flow out of china last year, the capital flight from someonend think about passing on their empire.
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if you have a long-term and dish and -- long-term ambition david hsbc's vice ♪xt, chairman of global banking and markets. ♪
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>> from our studios in new york city. this is charlie rose. charlie rose: john kerry is here. he's the 68th secretary of state. after 28 years in the senate he succeeded hillary clinton in 2013. last year he brokered a landmark , nuclear deal with iran. he also played a key role in syrian peace negotiations. according to the new yorker carries admirers and critics alike describe him in similar terms. optimistic and dogged, undaunted by risk. convinced that if he can get the relevant parties into the room

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